Reference no: EM132971413

Problem 1: A noninterest-bearing note receivable.

a) Causes no interest revenue to be recorded.

b) Includes a specific principal amount plus specified interest.

c) Includes a specific principal amount but an unspecified interest amount.

d) Includes an unspecified principal amount and an unspecified interest amount.

Problem 2: How is the gross profit method used in relation to inventory valuation?

a) To verify the accuracy of the perpetual inventory record.

b) To verify the accuracy of the physical inventory.

c) To estimate the cost of goods sold.

d) To provide a FIFO inventory value.

Problem 3: When a portion of inventory has been pledged as security for a loan:

a) The value of the inventory pledged should be deducted from the debt.

b) The fact should be disclosed but the amount of current assets should not be affected.

c) An equal amount of retained earnings should be appropriated.

d) The cost of the pledged inventory should be transferred from current asset to noncurrent asset.